Initial exchange offerings (IEOs) take place on exchanges so that projects have the opportunity to raise capital through the exchange. Similar to the initial coin offering (ICO), which uses a website via a project’s means, an IEO leverages the power of an exchange.

Since ICOs were banned in 2017 in China, IEOs have become a great alternative, allowing new projects to continue launching and gain more exposure, leveraging the power of an already-existing platform like an exchange that serves customers.

IEOs are beneficial to both potential investors and the projects themselves. For investors, they know the IEO is conducted on a well-known, trusted exchange and understand that it has taken the proper precautions to make sure the project is vetted and safe. This works both ways, as a project participating in an IEO can demonstrate its legitimacy because it has implemented the necessary steps to become eligible to participate in the IEO.

Key Takeaway
An initial exchange offering (IEO) is when cryptocurrency projects and start-ups list through an exchange in order to generate capital.